California Law Limiting Security Deposits Goes Into Effect July 1

The law makes California the twelfth state in the U.S. to have a law that limits security deposits to one month's rent.

On July 1, California’s Assembly Bill 12, a bill that caps the security deposit landlords are legally allowed to collect at one month’s rent, will go into effect.

The change is intended to address housing accessibility and affordability but also exempts landlords who own only two properties with no more than four units for rent. The law makes California the twelfth state in the U.S. to have a law that limits security deposits to one month’s rent.

The new law’s provisions are a boon to Californians frustrated by rising rents. As of 2023, the average cost to rent a one-bedroom apartment in the Golden State is $2,730.

Some, like San Diego renter Daniel Almanza, cannot afford that rate. Almanza, his wife, and two children are living in a $1,300-a-month one-bedroom studio apartment because it’s affordable. He’s not alone.

“A lot of my neighbors, they have two, three families living in the apartments because they can’t afford it. They rent the living room. They rent the bedroom. It’s hard,” Almanza told Fox 5 San Diego.

According to Rafael Bautista with the San Diego Tenants Union, the new law, authored by Assemblymember Matt Haney, removes a significant financial hurdle for renters seeking to find more affordable housing.

“Removing barriers is something that’s key to be able to have affordable, accessible housing,” Bautista explained. “So it’ll make it so that people can apply freely without having to worry about needing five to $10,000 to be able to move from one place to another.”

Patricia Mendoza, the statewide organizer for AACE, a non-profit organization that advocates for tenant’s rights, told CBS 8 that increases in rent are tied to the state’s growing homelessness crisis.

“They say that San Diego is the finest city,” Mendoza said. “It’s not just the finest city, but the most expensive city. We see this every day; we see people being unhoused and evicted just because rents are going up.”

Mendoza continued, “It’s going to help a lot of people. It is a really good step in the right direction, but we need to do more,” she added. “We need more tenant protections.”

Although the law is not retroactive, some landlords are still not happy about it and said it could lead to rental housing being pulled from the market. According to the California Apartment Association, the largest statewide organization in the country representing the interests of the rental housing industry, “Further limiting a property owner’s ability to financially cover property damage or unpaid rent is an unfair imposition for rental housing providers.”

Masih Fouladi, the executive director of the California Immigrant Policy Center, believes that the law’s benefits to renters, particularly renters of color and immigrants, outweigh any potential concerns from landlords.

Fouladi told the Times of San Diego, “In California’s high-cost rental market, expensive security deposits are often imposed on immigrants and people of color, effectively limiting access to safe and affordable housing. By capping high-security deposits, AB 12 advances a measure of equity and empowers immigrants and people of color across the state, who contribute daily to making our diverse state thrive.”